The Department of Justice has filed an antitrust lawsuit against Visa, alleging that the financial services firm has an illegal monopoly over debit network markets and has attempted to unlawfully crush competitors, including fintech companies like PayPal and Square. The lawsuit, which was first rumored by Bloomberg, follows a multiyear investigation of Visa, which the company disclosed in 2021, The Verge reported.

“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” US Attorney General Merrick Garland said in a statement. “Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality of service. As a result, Visa’s unlawful conduct affects not just the price of one thing — but the price of nearly everything.”

According to the complaint, Visa entered into paid agreements with potential competitors as part of an effort to fend off competition from newer entrants into the payment processing industry. These practices have allowed Visa to build an “enormous moat” around its business, the complaint alleges.

Reuters reported Visa shares took a hit on Tuesday after the U.S. Department of Justice filed a lawsuit accusing it of violating antitrust law by suppressing competition by threatening merchants with high fees and paying off potential rivals.

Visa, one of the world’s largest payment networks, processes more than 60% of debit transactions in the U.S., bringing it $7 billion each year in fees collected when transactions are routed over its network, the Justice Department said. The company protects that dominance through agreements with card issuers, merchants, and competitors, prosecutors allege.

Visa shares closed down around 5.5% on Tuesday.

CNBC reported The U.S. Justice Department on Tuesday sued Visa, the world’s biggest payments network, saying it propped up an illegal monopoly over debit payments by imposing “exclusionary” agreements on partners and smothering upstart firms.

Visa’s moves over the years have resulted in American consumers and merchants paying billions of dollars in additional fees, according to the DOJ, which filed a civil antitrust suit in New York for “monopolization” and other unlawful conduct.

Visa and its smaller rival Mastercard, have surged over the past two decades, reaching a combined market cap of roughly $1 trillion, as consumers tapped credit and debit cards for store purchases and e-commerce instead of paper money. They are essentially toll collectors, shuffling payments between the merchant’s banks and cardholders.

Visa called the DOJ suit “meritless.”

“Anyone who has bought something online, or checked out at a store, knows there is an ever-expanding universe of companies offering new ways to pay for goods and services,” said Visa general counsel Julie Rottenberg.

“Today’s lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving,” Rottenberg said. “We are proud of the payments network we have built, the innovation we advance, and the economic opportunity we enable.”

In my opinion, it sounds as though Visa has been doing some sketchy things. It is no wonder that the U.S. Department of Justice is looking into the situation.